Global equities fell modestly amid generally positive economic data and persistent political chatter. US economic data were largely positive. Trade picked up in January as exports and imports climbed, while February nonfarm payrolls handily beat expectations. House Republicans unveiled legislation to replace the Affordable Care Act, but it remains too early to project potential market impact as the bill may be significantly altered or supplanted during the legislative process. European economic data were mixed but continue to show positive momentum.
The third and final estimate of Q4 2016 eurozone GDP confirmed 1.7% y/y growth—the 15th consecutive quarter of expansion.
In Asia, China’s annual National People’s Congress confirmed expectations for most 2017 economic targets—specifically, 6.5% GDP growth. South Korea’s Constitutional Court permanently removed Park Geun-hye as president amid corruption charges. By law, the country must now elect a new president within 60 days.
In the week ahead, the US releases employment data, the Fed and Bank of England meet to determine their countries’ respective monetary policies, and the Netherlands holds Parliamentary elections. As the election passes, expect falling uncertainty to broadly benefit global stocks regardless of the outcome.
Global equities rose modestly as economic data were mixed and corporate earnings beat expectations Earnings season started positively in the US, with most major US banks beating expectations due to strong trading and loan growth. December’s Small Business Optimism Index exceeded expectations. Meanwhile, the Producer Price Index (PPI) met expectations, up from November.
On the political front, Republicans initiated the process to repeal portions of the Affordable Care Act, though it is impossible to know what their final plan will look like. Similarly, while President-elect Trump’s press conference garnered attention, it remains too early to discern specific policy plans or their market impact. European economic data were light but generally positive.
November industrial production exceeded expectations in the UK, Germany, Spain, Italy and France. UK construction output accelerated in November. Europe continues to be one of the world’s bright spots when it comes to economic results relative to expectations. The only major Japanese economic release was December money supply which increased, modestly missing forecasts. Chinese export growth, CPI and money supply disappointed, while import growth and currency reserves exceeded expectations. In the week ahead, the US releases CPI, industrial production and several housing reports. The Eurozone reports CPI, and the UK posts CPI and retail sales. Japan releases retail sales and industrial production. China provides an update on retail sales, fourth quarter GDP and industrial production.